Yahoo! is seeking to restart merger talks with AOL as a means of defending itself against the $45 billion (£23 billion) hostile bid approach from Microsoft, The Times has learnt.

It is understood that Yahoo! and its team of advisers from Goldman Sachs and Lehman Brothers, the US investment banks, have spent the past week evaluating possible tie-ups with media and technology firms that would save it from being swallowed by Microsoft.

It is also understood that one option being explored is to restart merger talks with AOL, the online business owned by Time Warner. Tie-ups with groups such as Google or Disney are also being considered. Although Yahoo! and AOL previously failed to join forces because of differences over price, it is hoped that the urgency created by an unwelcome approach from Microsoft and an impending economic downturn will spur the two into new talks. Google, which offered support to Yahoo! when the Microsoft approach was made public, also has a 5 per cent stake in AOL.

The Wall Street Journal reported Saturday that Yahoo’s board has voted to reject Microsoft’s bid as undervalued. But rather than waiting for the next shoe to drop, Yahoo is making other plans.

I wrote when the news first broke that a combined Microsoft-Yahoo would be a case of two companies floundering separately coming together to flounder as one. Yahoo hooking up with punchless AOL would be the same scenario, in spades.

Obviously, Yahoo has to cozy up to just about anyone (even Disney, apparently) in order to try and get Microsoft to jack up its offer from what the Web company believes is an insulting $44-billion or so. Like my friend Paul Kedrosky, I think Yahoo is going through the corporate-takeover equivalent of Elizabeth Kubler-Ross’s classic stages of grief — anger, denial, bargaining, etc. Right now it’s stuck in bargaining.

The Yahoo! response does not change our belief in the strategic and financial merits of our proposal. As we have said previously, Microsoft reserves the right to pursue all necessary steps to ensure that Yahoo!’s shareholders are provided with the opportunity to realize the value inherent in our proposal.